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Is Ever Harvest Group Holdings Limited's (HKG:1549) CEO Paid Enough Relative To Peers?

Simply Wall St

In 2016, Wallace Lau was appointed CEO of Ever Harvest Group Holdings Limited (HKG:1549). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Ever Harvest Group Holdings

How Does Wallace Lau's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Ever Harvest Group Holdings Limited has a market cap of HK$112m, and reported total annual CEO compensation of HK$1.6m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$1.5m. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.7m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Ever Harvest Group Holdings stands. On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Ever Harvest Group Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry.

That means Wallace Lau receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see, below, how CEO compensation at Ever Harvest Group Holdings has changed over time.

SEHK:1549 CEO Compensation May 17th 2020

Is Ever Harvest Group Holdings Limited Growing?

Ever Harvest Group Holdings Limited has seen earnings per share (EPS) move positively by an average of 76% a year, over the last three years (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ever Harvest Group Holdings Limited Been A Good Investment?

Given the total loss of 67% over three years, many shareholders in Ever Harvest Group Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Remuneration for Wallace Lau is close enough to the median pay for a CEO of a similar sized company .

We'd say the company can boast of its EPS growth, but it's disappointing to see negative shareholder returns over three years. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. Taking a breather from CEO compensation, we've spotted 4 warning signs for Ever Harvest Group Holdings (of which 2 are significant!) you should know about in order to have a holistic understanding of the stock.

If you want to buy a stock that is better than Ever Harvest Group Holdings, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.